Houses

Whilst rare, some houses are held on leases as opposed to the usual freehold title. The Leasehold Reform Act 1967 gives leaseholders the right to either extend their lease or to acquire the freehold.

The Leasehold Reform, Housing and Urban Development Act 1993 (the 1993 Act) is now pretty well known by both industry professionals, leaseholders and the general public alike. What is much well know, mainly due to the scarcity, is the process to extend a lease or enfranchise a leasehold house. There are certain areas of London and indeed the country, where this type of tenure is more common, and the issues that this presents to the owners of these properties is certainly complex.

Before we had the 1993 Act, we had the Leasehold Reform Act 1967 (the 1967 Act) and it is this Act that gives the leaseholder either the right to extend their lease by a further 50 years or to acquire the freehold. Under the former, the freeholder cannot charge a premium but will be able charge a ‘modern ground rent’. This ground rent is usually significantly higher than the rent that the leaseholder is currently paying, but will only kick in upon the expiration of the original lease. The enfranchisement methodology is a lot more complex, but both are subject to stringent qualifying criteria based on the terms of the tenancy.

One part of the criteria is particularly important and that is the part that determines firstly the right to extend and secondly the valuation method of the enfranchisement. If it is determined that the property qualifies under Section 9(1) of the Act, then it is to be valued under what is referred to at the Original Valuation Basis, so called because the original reasoning behind the 1967 Act was that the freeholder owned the land and the leaseholder owned the house. At the end of the lease, the freeholder would be left with the vacant piece of land which he could then let at a ‘modern ground rent’.

The second method of valuation under Section 9(1A) is rather different and is based on the reality that the freeholder will gain possession of a house and not a cleared site. The methodology is very similar to that of enfranchisement under the 1993 Act and would include marriage value if the lease is under 80 years. The very nature of this produces a much more expensive premium but it is not for the leaseholder to choose.

If you are one the small number leasehold house owners in London or considering buying a leasehold house, please feel free to contact us today for some initial advice and a quotation for both extension and enfranchisement purposes.

Leasehold Calculator

Estimate as to the likely costs of a lease extension under the Leasehold Reform, Housing and Urban Development Act 1993.

I had a really positive experience with Shaun Blake at Peter Barry. The survey was very thorough and Shaun was on hand to answer several follow-up questions I hand. I would recommend them to anyone.
Requested a level 2 survey with Peter Barry and was very happy with the service, the survey goes above and beyond what I have experienced before and gave a very thorough breakdown of the risks and what next steps both I and the solicitor should take. I highly recommend going with them!
Response from the owner:Thank you for sharing your experience working with Peter Barry Surveyors.
I’m using them to help with lease extension and provide valuation, survey and advise on same. Still in the process, but they have very quick, efficient, professional and also helpful to date.
Lease extension is a tricky process so having them deal with this efficiently and provide clarity has been so welcome.
Response from the owner:We are pleased to hear how useful you have found our service.
Peter Barry offers an efficient and effective service. Helpful advice on various levels of homebuyers reports. It was so helpful to be able to talk things through with David Breeze. Recommended.
Response from the owner:Thank you for your recommendation Mr Greenwood.
Administrator Joanne was super quick to get me into their system and assigned Surveyor, David Breeze. David is delightful, wonderful, knowledgable, even helpful after surveying the property to assist me with outstanding tasks to make sure I was comfortable and understood the reports.
Response from the owner:We are pleased to hear that you were so satisfied with the service you received from David.
Excellent customer service.
Jaynell was extremely helpful and David Breeze provided us with a very comprehensive and detailed report.
We welcomed the opportunity to speak with him before and after the survey. He answered all our questions and addressed our concerns by recommending possible solutions. I have already recommended him and all at Peter Barry.
Thank you for a very positive customer experience.
Response from the owner:We appreciate your recommendation & positive feedback, thank you.
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